Redundancy insurance could be taken out to provide you with security for your loan, mortgage or essential repayments via a tax free income in the event that you are made involuntarily unemployed. Of course the type of policy chosen would depend on what you have to pay out each. Mortgage payment protection can be a great way to ensure that you would have an income towards meeting your repayments. Loan cover could be chosen if you have secured or unsecured loan repayments to make and income protection would allow you an income towards being able to meet any essential repayments such as your rent and utility bills.
When you have decided on the most suitable form of redundancy cover you then have to decide how much of your income or mortgage/loan repayments you need to protect. There would be a limit and this is set by providers so they do have to pre-agree to the amount that is chosen. This sum would become your tax free income if a claim had to be made due to suffering one of the events and this will differ substantially between providers. You could be eligible to make a claim on the policy after the 30th day of suffering one of the events. However you could need to wait for up to as long as the 60th or the 90th days before you make your claim. Your benefits could continue over 12 months or they could be paid over a period of 24 months should you need to claim for this length of time. However once the term had been reached then the benefits would cease regardless of your current circumstances.
While redundancy insurance is a great way to protect against your becoming unemployed you might also want to take out protection for incapacity too. In this case you could choose to pay more each month for the premiums and have this added in. A claim could then be made for either event if it were needed. You could also check the terms of your policy to find out if your provider would give you an income if you had to stop working full time in order to remain at home and take care of a family member. A generous provider will include this added form of security.
Finally always check the terms of any redundancy insurance you are considering to ensure the exclusions would not stop you from claiming on your policy. There could be just the most frequently found exclusions in the policy or your provider could include many more and these need to be checked against your personal circumstances.
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